Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

finance.yahoo.com

Post reply on HN
Print view View original

51–60 of 98 posts

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#51

Post by jgroome »

drsintoma wrote: post #8
larrys wrote: post #6

And the domain "facebooksuit.com" was just registered: Domain Name: FACEBOOKSUIT.COM Registrar: GODADDY.COM, LLC Whois Server: whois.godaddy.com Referral URL: http://registrar.godaddy.com Name Server: NS05.DOMAINCONTROL.COM Name Server: NS06.DOMAINCONTROL.COM Status: clientDeleteProhibited Status: clientRenewProhibited Status: clientTransferProhibited Status: clientUpdateProhibited Updated Date: 22-may-2012 Creation…

godaddy? really?

Problem? They're cheap and easy. I imagine you're disappointed because they're not too highly regarded in the tech industry, but honestly you shouldn't expect your personal political beliefs to be held by everybody else.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#52

Post by mrcapers »

tomgallard wrote: post #21

I'm a bit confused about this. I distinctly remember the news about the earnings warning (due to difficulty of monetizing mobile users) coming out before the IPO. So there can be no complaint there. The article suggests that the problem is that the banks underwriting the IPO cut their own estimates for Facebook's earnings based on this warning, and then didn't share it with the general public. Surely this is nothing…

exactly. the biggest issue is the suspicion of FB giving more material, informational color on rev. growth to the analyst(s) than to the public.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#53

Post by rhizome »

vijayr wrote: post #7
guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

Is it this bad in Europe and Asia? or just in the US? Almost every day we hear banks doing this, banks doing that - most of it is unethical, and many of it probably illegal, yet nothing seems to be happening to them. This is depressing.

The agencies who investigate what you describe are understaffed and underfunded, many say intentionally.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#55

Post by cube13 »

chernevik wrote: post #32

The bankers surely know how disastrous something like this would be. Facebook has been aggressively indifferent to this whole process, which involves a lot of complexity both in decision making and communication. "Don't make the analysts look bad" is an important rule, but one that's easy to miss unless you spend some time thinking through your communications with the market. If FB's initial analyst communications em…

Was it really that shady?

From the Reuters article, it sounds like Facebook issued the updated SEC filing during the middle of their roadshow, and the analysts went over it and issued new forecasts to their paying customers.

Keep in mind that the underwriters are barred from making public forecasts during the lead up to an IPO.

Also keep in mind that the SEC filing was public, so anyone could go and read through it. So it's not like this was inside information. It was available to be consumed.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#56

Post by 16s »

guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

Absolutely. The concept of 'diversification' was fabricated to convince 'dumb money holders' to give up more cash. That's the sole purpose of diversification.

"You really need to diversify just a bit more. With as little as 50,000 dollars more, we can expose your portfolio to international rising growth stocks in Asia."

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#57

Post by SideburnsOfDoom »

sp332 wrote: post #23
guelo wrote: post #4

It is not possible to trust Wall Street, the whole thing is built on insider trading. They call customers that are not on the inside "dumb money" and unashamedly try to figure out how to take their money.

The "market" is usually caveat emptor - the buyer has to take into consideration how much they trust the seller. On top of that, society has some laws against fraud that make lying more harmful to the seller. That means the buyer can have some amount of faith in the seller. For publicly traded companies, this goes a lot further. The SEC is supposed to create an environment with reasonable auditing and pretty harsh pe…

I was with you right up to the "if"

http://www.rollingstone.com/politics/news/is-the-sec-coverin...

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#58

Post by chernevik »

cube13 wrote: post #55
chernevik wrote: post #32

The bankers surely know how disastrous something like this would be. Facebook has been aggressively indifferent to this whole process, which involves a lot of complexity both in decision making and communication. "Don't make the analysts look bad" is an important rule, but one that's easy to miss unless you spend some time thinking through your communications with the market. If FB's initial analyst communications em…

Was it really that shady? From the Reuters article, it sounds like Facebook issued the updated SEC filing during the middle of their roadshow, and the analysts went over it and issued new forecasts to their paying customers. Keep in mind that the underwriters are barred from making public forecasts during the lead up to an IPO. Also keep in mind that the SEC filing was public, so anyone could go and read through it.…

Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged.

To me a lot of this falls within reasonable expectations of how openly subjective information can be communicated in the first place. Any communication involving judgment and ambiguity and anticipation is going to travel better and faster within some social network, and that's going to advantage some over others. I don't think the advantages are insurmountable, crowds are often wrong and anyone good at this stuff can find their way in. But I definitely see why other people find the whole thing fishy.

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#59

Post by joe_the_user »

JumpCrisscross wrote: post #25

The original Reuters article does a better job explaining this than the link-bait title here: http://www.reuters.com/assets/print?aid=USBRE84L06920120522 FB amended their S-1 to lower revenue forecasts. Following that, a research analyst at Morgan Stanley cut his revenue forecast on FB close to their IPO. Nothing here should fire anyone up. Equity research must be conducted independently of the investment bankers' no…

What in particular in your linked article contradicts the original article?

1) The estimates were changed in mid run-up - check

2) This was considered unusual - check (your article, not Henry Blodget, has the screaming caps "very unusual" in it).

3) This may have contributed to Facebook's less than stellar performance - check

4) The estimates were disseminated only to large clients - not confirmed or contradicted, so the Blodget, for better or worse, is saying more than your link.

So, the problem is ????

Re: Facebook Bankers Secretly Cut FB Revenue Estimates In Middle Of IPO Roadshow

#60

Post by cube13 »

chernevik wrote: post #58
cube13 wrote: post #55

Earlier quoted context omitted.

Was it really that shady? From the Reuters article, it sounds like Facebook issued the updated SEC filing during the middle of their roadshow, and the analysts went over it and issued new forecasts to their paying customers. Keep in mind that the underwriters are barred from making public forecasts during the lead up to an IPO. Also keep in mind that the SEC filing was public, so anyone could go and read through it.…

Estimates of underwriters' estimates are presumed to be indicative of management opinion. That's a touch shady to begin with, ideally the analysts shouldn't have any "extra" information in the first place, right? Given that a change in those estimates is interpreted as a change in management opinion -- if that change is communicated to one set of investors, the others are disadvantaged. To me a lot of this falls with…

The facts were public. The analysis was not. Here's the information that the analysts were working off of:

http://www.sec.gov/Archives/edgar/data/1326801/0001193125122...

The facts were that Facebook had less profit for Q1 2012 than Q1 2011, despite making 25% more revenue. It was blamed on lack of new revenue from the mobile space.

The "disadvantage" is to people who were blindly buying Facebook without doing due diligence.

Post reply on HN